4.10 Suppose annual inflation
rates in the U.S. and Mexico
are expected to be 6% and 80%, respectively, over the next several years. If
the current spot rate for the Mexican peso is $.005, then the best estimate of
the peso's spot value in 3 years is

Suppose annual inflation rates in the U.S. and Mexico are expected to be 6% and 80%, respectively, over the next several years. If the current spot rate for the Mexican peso is $.005, then the best estimate of the peso's spot value in 3 years is

To be very honest with you, I don't know the process. Really sorry about that. I only know the answer because I also have answered it many times here and also in the quiz of my student. No offense.